Which one of the following is not an accurate description of the Allowance for Doubtful Accounts? Multiple Choice : The account is a temporary account. The account is increased by an estimate of uncollectible accounts expense. The account is a contra account. The amount of the Allowance for Doubtful Accounts decreases the net realizable value of a company's receivables

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Business

Konner Mosley

16 December, 16:48

Which one of the following is not an accurate description of the Allowance for Doubtful Accounts? Multiple Choice : The account is a temporary account. The account is increased by an estimate of uncollectible accounts expense. The account is a contra account. The amount of the Allowance for Doubtful Accounts decreases the net realizable value of a company's receivables

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Arnav Gould · Answer 1

Answer: The account is a temporary account.

Explanation: Allowance for doubtful accounts refers to the contra-asset accounts prepared to reflect the actual debtors that are expected to be paid.

Temporary accounts refers to those accounts the balance of which becomes zero at the end of the financial year due to the closing entries made. However, the allowance for doubtful accounts remain on the balance sheet if the expectancy of unpaid debtor remains as such.